Incheon free economic zone agency faces sweeping external audit under Park Chan-dae transition team

The transition team of Incheon Mayor-elect Park Chan-dae is reviewing plans to launch an external audit of the Incheon Free Economic Zone Authority, covering its major projects and investment attraction processes — a move that has brought renewed calls for a comprehensive overhaul of the agency's long-criticized operating systems.

The authority simultaneously exercises powers over investment attraction, urban development, competitive bidding and licensing, concentrating enormous authority in a single organization while lacking adequate institutional checks — a structural weakness critics have long flagged.

The transition team has been closely examining the decision-making structure and key project processes of the eighth elected-term administration during recent briefings from the authority.

"We are preparing a special audit targeting the Incheon Free Economic Zone Authority," a transition team official said, adding that the team is "reviewing the deployment of external audit personnel in consultation with central government agencies, including the Board of Audit and Inspection."

A comprehensive review of the authority's investment attraction projects, large-scale development initiatives, bidding procedures and personnel management is expected to follow the launch of the ninth-term city government in July.

Recurring project controversies point to structural, not isolated, failures

Controversies surrounding the Incheon Free Economic Zone Authority have not been confined to any single project — they have recurred across multiple cases.

In several development projects within Songdo International City, questions have repeatedly been raised over the transparency of contractor selection, the process for designating preferred negotiating partners and changes to bidding criteria.

The Songdo R2 block development project drew scrutiny over the financial capacity of participating entities and the appropriateness of the project structure, with some critics pointing to the involvement of companies with limited capital.

The Songdo M5 block development project similarly faced questions over procedural propriety in the maintenance of preferred negotiating partner status.

However, these controversies remain at the stage of allegations and legal disputes, and whether any actual violations occurred must ultimately be determined through audits, investigations or court rulings.

An earlier case involving a Songdo project related to Naeeo Fashion Hyungji resulted in disciplinary action against staff for violating relevant ordinances — yet beyond the punishment itself, no one was held accountable for the flawed project.

The same pattern applies to the Cheongna Film and Culture District attraction project. Across a significant number of large-scale projects, the cycle repeats: term-limited civil servants involved in the authority's investment attraction activities engage in the same conduct, and no one beyond them faces sanctions or is made to bear responsibility.

International school projects also warrant scrutiny

The international school attraction initiative — one of the flagship projects of the eighth elected-term administration — also generated multiple controversies during its implementation.

Some observers questioned whether the timelines for attracting international schools to Songdo and Yeongjong were pushed through at an unreasonable pace to align with political schedules, including the June 3 local elections.

The Yeongjong international school project is currently the subject of litigation over allegations of an unfair bidding process, yet outgoing Mayor Yoo Jeong-bok traveled to the United Kingdom in the lead-up to the local elections to personally sign an MOU with preferred negotiating partner Wickham Abbey School.

Given that the project is under litigation and is tied to the provision of a school site and financial support, some say a comprehensive review of the entire project structure is needed.

Concentrated authority, limited reach of internal audits

Former officials and experts said the problems at the Incheon Free Economic Zone Authority should be viewed not as the failings of specific projects or individuals, but as a structural issue rooted in the organization's design.

The authority handles everything from investment attraction and development planning to contractor selection and licensing within a single organization. When decision-making authority is concentrated in this way, external verification and after-the-fact oversight become difficult.

In competitive bidding projects in particular, evaluation criteria, the composition of review panels and negotiation processes are largely kept confidential on grounds of expertise and security, making scrutiny by citizens and the city council difficult.

"The authority is a necessary organization for national competitiveness, but the greater its powers, the stronger the transparency and checks-and-balances systems it requires," a former official at the authority said. "When the emphasis is placed solely on the speed of project execution and administrative efficiency, procedural legitimacy can be eroded."

Post-retirement and term-limited civil servant management also under fire

Another contentious issue surrounding the authority is the management of retired officials and term-limited specialist personnel.

The authority has actively drawn on outside experts and term-limited civil servants for private investment attraction and international affairs.

However, some have called for better management of potential conflicts of interest when such individuals move into related companies or business sectors after leaving the authority.

Current public ethics law regulates post-retirement employment restrictions and reviews of job relevance for former officials. In practice, however, institutional limits make it difficult to verify whether such individuals continue to exert influence.

Accordingly, some argue that any future audit should also examine the post-retirement employment status of former officials, the relevance of their new roles to their previous work and their relationship to projects they oversaw while in office.

City council oversight function must also be strengthened

Strengthening the role of the Incheon City Council as a check on the authority is also cited as a pressing task.

In past administrative audits, recurring criticisms have been raised over the completeness of documents submitted, the manner in which projects are explained and the limits of verifying specialized fields. The personnel management system is also problematic.

Deliberate "engineered personnel moves" have been repeated for years without effective monitoring — term-limited civil servants involved in investment attraction are a particular concern.

Large-scale development projects involve complex contract structures and financing arrangements that are difficult to assess through short-term administrative audits alone.

Calls have therefore emerged for a dedicated audit framework for the authority, expanded participation by specialist advisers and a standing review system for major competitive bidding projects.

Beyond diagnosis, systemic reform needed — a test for the Park transition team

The external audit the transition team is pursuing should go beyond assigning blame for past projects and serve as an opportunity to redesign the operating systems of the Incheon Free Economic Zone Authority, observers say.

Former officials and experts said the external audit should comprehensively examine six areas: the procedures for advancing large-scale development projects; the competitive bidding and contractor selection system; the methodology for evaluating investment attraction outcomes; the management of term-limited civil servants; the oversight of retired officials; and the independence of internal audits.

"The major projects of the authority should not simply be reviewed during the transition period and then set aside," a transition team official said. "After the ninth-term city government is launched, a task force must be formed to thoroughly examine all the projects that have been carried out, and those responsible for any wrongdoing must be held accountable without exception."

The official went on to say that "if the new city government fails to reform the deeply entrenched structural problems at the authority that have persisted for decades, there will never again be an opportunity to fix the insular 'league of their own' that has taken root there," adding that "ultimately, the beneficiaries are those insiders, while the costs fall on Incheon and its citizens."

Ultimately, the core issue is not about targeting a particular administration or individual, but about building a structure in which an organization responsible for development projects and investment attraction worth trillions of won can earn the trust of citizens.

Whether the review of the Incheon Free Economic Zone Authority — set to begin with the launch of the ninth-term city government under Mayor Park Chan-dae — will move beyond confirming past controversies to establish a new model for operating a free economic zone with genuine transparency and accountability remains to be seen.